While some people wonder whether there's too much hot air in the clean-tech sector, the man who has advised California Gov. Arnold Schwarzenegger on environmental matters says the industry is just beginning to reach its potential.

Regardless of who sets up shop in the Oval Office in January, sweeping changes in federal energy and climate policy are expected to give the clean-tech industry a big boost, says Terry Tamminen, former director of the California Environment Protection Agency and now a clean-tech adviser for Pegasus Capital Advisors.

"We need to take California's standards and federalize them," said Tamminen, who until last year served as environmental adviser to Schwarzenegger and is considered a driving force behind the governor's green policies.

California has made sustainable-energy moves, with laws aimed at limiting greenhouse gases and encouraging the adoption of alternative-energy sources such as solar power. Today, 28 states have plans to reduce emissions of greenhouse gases, and 7 have put them into law, with more expected to come this year.

"So by the time the new president takes office in January 2009, the majority of the U.S. population will live in a state that is doing what it would do if it was a separate country under the Kyoto accord," Tamminen said in an interview with CNET News.com. "It's very much due to California's leadership."

The result of the policy is that California today has the lead in energy innovation and efficiency, he said, even though the state may be "a year or two late" on its own goals, mainly due to transmission bottlenecks.

Tamminen keeps a scorecard on the green profile of the presidential candidates. Even though he thinks any of the three will be much more active than President Bush, there are differences. He gives Hillary Clinton and Barack Obama a "B," but to John McCain, he gives an "F."

The two democratic candidates run about equal, Tamminen's said, but at the moment, he thinks Obama has a slight edge, as he's made climate policy more of a campaign issue.

"I believe it will be an issue that he will tackle in his first couple of months as president," he said.

The goal will be to establish a plan for the reduction of greenhouse gas emissions on a federal level, much like California's plan to reduce emissions 20 percent by 2010, and 33 percent by 2020.

"That would spur all kinds of investments," Tamminen said, "because investors then know that there is certainty that there is going to be demand for their product, whether it's wind turbines or solar, or what have you."

In his book Lives per Gallon, Tamminen calculates that the American oil industry gets about $100 billion in subsidies--mostly tax credits--every year. That money could be better spent on things like charging stations for electric cars, hydrogen stations, and fuel stations for natural gas, he argues.

"Some financial incentives wouldn't hurt," he said. "We have been subsidizing fossil fuels for so long, so it's just about leveling the playing field."

Tamminen's office resides on Main Street in Santa Monica, Calif., in a building once owned by the governor (a giant painting of the Terminator still hangs by the entrance). For more than a year, Tamminen has been working as an adviser on clean tech for private-equity fund Pegasus Capital Advisors and venture capital firm VantagePoint Venture Partners.

"I know Al, and I respect him, and I tried to help him get elected in the year 2000, but I have to be candid and tell you that I have been very disappointed in him," Tamminen said.

Tamminen argued that politicians should concentrate on finding solutions. Gore, he said, is still trying to define the problem--first with the film An Inconvenient Truth and now with a $300 million ad campaign.

"I've said to Al, 'Look, you must get out there and start talking about the solutions,'" Tamminen said.

While many people are looking for a single solution--the Bush administration has put all bets on ethanol, according to Tamminen--there should be much wider acceptance of approaches to climate issues.

"There is no silver bullet," he said. "All different technologies will be commercialized," from biodiesel made of algae to solar paint developed with nanotechnology. "I don't think we even have begun to scrape the surface of solar power."

Ultimately, Tamminen said, innovation will be driven by urgent needs.

"Climate policy is what's pushing those technologies out to the commercial forefront much faster," he said. "We will have periodic shortages of gasoline during the next few years, and when that happens, the person who invented how to get liquid motor fuel out of algae, out of agricultural waste, is going to look like a genius."